1996 National Study Supplement
Management White Paper

Leasing vs. Purchasing

April, 1996

Contents

• Introduction
• Methodology
• The Current Vehicle
• The Next Vehicle
• Satisfaction with Dealership Leasing and Service Experiences
• Lessee's Loyalties to the Dealership and to the Make

Introduction  Top

This 1996 Management White Paper is being provided by The Dohring Company as a supplement to our 1996 National Automotive Consumer Study.

The national study, provided as a service to the automotive industry, focused on the most topical issues of the day including:

• Consumer attitudes and perceptions of franchised car dealerships
• One-price selling versus negotiating the purchase
• Purchasing new vehicles versus late model used vehicles
• Used car superstores

This white paper is intended to provide in-depth answers to help you better understand the consumer perspective on specific issues.

The national study has not been funded by any outside source and is strictly provided as a service. The design intention was to address several primary areas of importance to our automotive, OEM supplier and dealer client base.

The Dohring Company is North America's largest provider of custom market research to the retail automotive community. We have conducted more that 3,000 automotive market research studies for dealers, dealer associations, advertising agencies, manufacturers and suppliers in North America and internationally. The company, based in Glendale, California, employs over 100 full time staff and has conducted over 300,000 interviews with vehicle buyers in 1995 alone, and over one million in the past ten years.

Additionally, we are proud to have been designated Marketing Research Supplier to the 1996 Atlanta Olympic Games.

The Dohring Company is a full-service provider of marketing research and the developer of TrendTrak®, our exclusive on-site survey polling device. For additional information, please contact us at 1-800-242-8022.

Methodology  Top

A total of 1,253 respondents were surveyed from across the 50 United States in proportion to their household populations. All respondents were surveyed by telephone during December 1995, and were qualified as intending to purchase a new or used vehicle in the future from a new car dealership. The study has a standard error of ± 2.8%.

The Current Vehicle  Top

More than nine in ten of the respondents (93.8%) had purchased their current vehicle and only 6.2% had leased their current vehicle. Almost two thirds of those respondents who had leased their current vehicles (65.3%) had leased them within the past two years. Leasing was most prevalent among respondents in income categories exceeding $85,000, where about 1 in 5 (19.5%) leased their vehicles.

Leased vs. purchased their current vehicle:

The Next Vehicle  Top

When asked about their next vehicle acquisition, nine in ten (91.5%) indicated that they intended to purchase their next vehicle and only 8.5% indicated that they currently intend to lease their next vehicle. Since leasing is much more prevalent than just 1 in 10 car purchases, many car buyers apparently arrive at the dealership intending to purchase their vehicle and then decide to lease based upon what occurs at the dealership. Almost one-in-four of those who said that they intend to purchase their next vehicle (22.1%) said they would consider leasing their next vehicle.

Of those who currently own their vehicles, only 5.3% intend to lease their next vehicle. Of those who lease their current vehicle, about half (50.7%) intend to lease again. There was no significant difference between males and females regarding intention to lease or purchase their next vehicle.

The intention to lease their next vehicle is highest among 18-24 year olds (18.7%) and lowest among those 50 years and over (4.2%). Note that the youngest car buyers (those who would likely have the least money available for a down payment and who would likely have the lowest disposable income) have the greatest interest in leasing their next vehicle.

Intend to lease their next vehicle:

Leasing is also more popular among those intending their next vehicle to be a sport utility vehicle (9.8%) and lowest among those who expect their next vehicle to be a minivan (5.5%).

Leasing is more popular among those in the Northeastern U.S. and least popular among those in the Southeastern U.S.

Intend to lease their next vehicle:

Satisfaction with Dealership Leasing and Service Experiences

Leasing tends to lead to higher customer satisfaction. Individuals who leased their vehicles tend to be more satisfied with their vehicle acquisition experience at the dealership (43.5% of those who leased rated their buying experience "excellent" vs. 33.0% of those who purchased rated their buying experience "excellent").

Fewer individuals who leased their vehicles brought them back to the dealership for service (56.5% vs. 66.5% of purchasers). However, more of those who brought their leased vehicles back to the dealership for service rated their service experience "excellent" (48.7%) than did purchasers (38.6%).

Lessee's Loyalties to the Dealership and to the Make  Top

Those who leased their vehicles are more inclined to return to the dealership for their next purchase than those who had purchased their vehicles from a dealership (23.2% of those who leased said they would "definitely" go back and 30.4% said "probably" versus 15.8% of those who purchased said they would "definitely" go back and 34.6% of those who purchased said they would "probably" return to the dealership for their next purchase.)

Further, 57.3% of those who leased their current vehicle planned to get the same make of vehicle next time, while 45.7% of those who purchased their current vehicle planned to get the same make of vehicle next time.